Last Updated: Aug. 2, 2021
Financial Results for 1Q FY2021
About the impact of an upswing in raw material costs
The HPP Company will look to increase selling prices, reduce costs mainly through supply chain innovation, and improve marginal profit by shifting to high-performance products. The thought here is to offset the upswing in raw material costs through these comprehensive measures. The UIEP Company will increase selling prices thereby securing a spread against raw material costs. Should raw material costs continue to rise in the 2H, steps will be taken to secure further spreads between selling prices and raw material costs, reduce costs, and improve marginal profit focusing on prioritized products. Despite the impact of price hikes in steel and lumber, the Housing Company’s basic policy is to reduce costs through various measures including leveling out factory production and pushing forward existing initiatives such as the integration of production rather than first passing onto selling prices.
- *HPP Company：High Performance Plastics Company
- *UIEP Company : Urban Infrastructure & Environmental Products Company
Basically, the idea is not to pass on the entire increase in raw material costs to selling prices, but to offset through a combination of measures including cost reductions and improving the product mix.
The Housing Company is planning to release new Smart House products to commemorate its 50th anniversary. The Housing Company may also work toward increasing selling prices while at the same time providing new added value.
About the outlook for HPP demand in the three strategic fields and other matters
Contributions from the Electronics as well as Building and Infrastructure fields toward the upward revision are expected to be high. High raw material costs are projected to have the greatest effect on the Mobility field. We also anticipate that the Mobility field will be significantly affected by shortages in semiconductor supply.
While trends in liquid crystal panel demand are relatively firm, conditions are showing signs of slightly weakening especially in the China-related smartphone market. As a result, sales in the 2Q are not expected to be as strong as in the 1Q. In contrast, rather than experiencing a weak trend, results in the Non-LCD field were steady in the 1Q. In fact, we anticipate sales will further expand from the 2Q.
Trends in processing and other materials are firm on the back of strong semiconductor demand. As far as 5G-related materials are concerned, we believe that robust liquid crystal results, especially in the 1Q, were due to relatively firm shipments for 5G-compatible smartphones.
Although operating rates for Mobility-related components manufactured in India have declined slightly, trends in CPVC demand are relatively firm.
Yes, we have.
Demand for domestic flights is indeed recovering. In the case of SEKISUI AEROSPACE CORPORATION, however, a large portion of the company’s shipments are for international aircrafts. In this regard, international flights are yet to recover. Our business plans are based on the assumption that conditions will remain difficult. We intend to offset these ongoing difficult conditions through structural reforms and pioneering applications outside the aircraft field.
About the outlook for the housing market against the backdrop of the COVID-19 pandemic and the probability of achieving business plans
Although a state of emergency has been declared, we believe that demand for housing itself is steadily recovering. On this basis, we remain confident that 2Q forecasts are more than achievable. Last year’s 2Q saw a recovery from the impact of COVID-19 in the 1Q. In fact, 1Q demand was pushed forward to the 2Q. For the same reasons, growth in the 2Q this year appears a little weaker than the 1Q. We anticipate housing demand itself will remain strong.
About the outlook for COVID-19 diagnostic kit demand in the Medical Business and other matters
The antigen testing kit that we released to the market is distinguished by its short and simple operating method, which facilitates on-the-spot determination. We expect this new product will meet demand for testing at clinics and other medical facilities that do not have their own diagnostic capabilities, as well as testing for large crowds at events and other public gatherings. While demand for testing kits will decline as vaccinations rates increase, we believe there is still room for increasing sales thanks to the product’s distinguishing feature, namely the short time required for testing.